Investor Tax Tips
365 tax strategies for rental property investors. One new tip every day.
Today's Tax Tip — #104
States May Not Conform to Federal Depreciation
Some states like California and New Jersey do not follow federal bonus depreciation rules. You may claim bonus depreciation on your federal return but must add it back on your state return. This creates a state-federal depreciation timing difference that requires careful tracking.
Read more →Deductions (59 tips)
#1
Mortgage Interest Is Deductible on Rentals
#3
Property Taxes Are Fully Deductible
#9
Repairs vs Improvements: Know the Difference
#16
Deduct All Advertising Costs
#19
Deduct Utilities You Pay for Tenants
#21
Deduct Legal and Accounting Fees
#25
Deduct Pest Control and Lawn Care
#29
HOA Fees Are Deductible on Rentals
+51 more tips in this category
Tax Planning (33 tips)
#26
Make Estimated Tax Payments Quarterly
#30
Watch Out for the 3.8% NIIT Surtax
#50
Cash-Out Refinance Is Not Taxable Income
#100
Close in December for a Full Year of Write-Offs
#111
Prepaid Expenses and the 12-Month Rule
#113
At-Risk Rules Limit Your Deductions
#120
Energy Efficiency Tax Credits for Rentals
#131
Prepay Property Taxes Before Year End
+25 more tips in this category
Depreciation (29 tips)
#5
Depreciation Reduces Your Taxable Income
#24
Depreciation Recapture When You Sell
#31
Appliances Depreciate Over 5 Years
#34
You Cannot Depreciate Land
#41
Section 179 for Rental Personal Property
#55
The Mid-Month Convention for Depreciation
#76
Land Improvements Depreciate Over 15 Years
#86
A New Roof Depreciates Over 27.5 Years
+21 more tips in this category
Capital Gains (23 tips)
#18
Understand Capital Gains Tax Rates
#59
You Can Deduct a Loss on Rental Property Sale
#79
Installment Sales Spread Out Capital Gains
#101
Abandonment Loss When Walking Away
#117
Tax Lien Investing Has Unique Tax Rules
#119
Opportunity Zone Investments Defer Capital Gains
#124
Section 1250 Unrecaptured Gain on Sale
#126
Avoid Dealer Status to Keep Capital Gains Rates
+15 more tips in this category
Passive Income (21 tips)
#11
Understand Passive Activity Loss Rules
#28
Real Estate Professional Status Unlocks Losses
#63
Seven Tests for Material Participation
#71
Suspended Passive Losses Carry Forward
#74
Group Rental Activities for Tax Benefits
#90
Use Passive Income Generators to Absorb Losses
#108
Active Participation: The $25K Loss Allowance
#122
Tenant-Paid Improvements Are Usually Not Income
+13 more tips in this category
Record Keeping (20 tips)
#2
Keep Every Receipt From Day One
#4
Separate Bank Account for Each Property
#14
Security Deposits Are Not Taxable Income
#32
Document Property Condition at Purchase
#42
Track Capital Improvements in a Spreadsheet
#56
Schedule E Reports Rental Income and Losses
#98
Use a Dedicated Credit Card for Rentals
#116
Do Bookkeeping Quarterly at Minimum
+12 more tips in this category
Entity Structure (18 tips)
#7
LLC Basics for Rental Properties
#65
S Corp Structure for House Flippers
#77
Your LLC Operating Agreement Affects Taxes
#110
Series LLC for Multiple Properties
#129
Partnership Returns Are Due March 15
#133
Never Commingle Personal and Rental Funds
#149
Recourse vs Nonrecourse Loans Affect Basis
#182
Tenancy in Common for Joint Ownership
+10 more tips in this category
1031 Exchange (18 tips)
#20
The 1031 Exchange: Defer Taxes on Sale
#44
1031 Exchanges Require a Qualified Intermediary
#58
1031 Exchange Three-Property Rule
#66
Partial 1031 Exchanges Are Allowed
#69
Like-Kind Means Almost Any Real Estate
#82
Reverse 1031 Exchange: Buy Before You Sell
#96
Combine Section 121 Exclusion with 1031
#156
1031 Exchange into a Delaware Statutory Trust
+10 more tips in this category
Short-Term Rentals (18 tips)
#23
The Short-Term Rental Tax Loophole
#48
The 14-Day Rule for Vacation Homes
#54
Airbnb and VRBO Report to the IRS
#73
Collect and Remit Occupancy Taxes
#85
Furnishing a Short-Term Rental Is Deductible
#109
Short-Term Rental Business Licenses
#137
Cleaning Fees Are Deductible for STRs
#148
STR Income May Trigger Self-Employment Tax
+10 more tips in this category
Property Management (17 tips)
#12
Deduct Property Management Fees
#33
Deduct Tenant Screening Costs
#46
Eviction Costs Are Deductible
#51
Deduct Cleaning and Turnover Costs
#78
Deduct Staging and Photography Costs
#94
Deduct Annual Maintenance Contracts
#112
Deduct Lease Preparation and Legal Costs
#118
Deduct Pool and Hot Tub Maintenance
+9 more tips in this category
State Taxes (14 tips)
#13
State Income Tax on Rentals Varies Widely
#40
File State Taxes Where Property Is Located
#93
Real Estate Transfer Taxes Vary by State
#104
States May Not Conform to Federal Depreciation
#155
Multi-State Properties Create Tax Nexus
#167
Foreign Rental Properties Have Special Rules
#181
Check for State-Specific Landlord Tax Credits
#194
State Income Tax Nexus for Out-of-State Rentals
+6 more tips in this category
Cost Segregation (14 tips)
#15
What Is a Cost Segregation Study
#37
Cost Segregation Pays for Itself Quickly
#45
Bonus Depreciation on Short-Life Assets
#68
Cost Segregation Look-Back Studies
#99
Combine Cost Segregation with Bonus Depreciation
#127
Personal Property Identified in Cost Segregation
#142
Cost Segregation on Major Renovations
#162
Cost Segregation Usually Requires $500K+ Value
+6 more tips in this category
Audit Protection (14 tips)
#39
Report Every Dollar of Rental Income
#47
Keep Tax Records for at Least Seven Years
#80
Keep a Contemporaneous Time Log for REPS
#92
How the IRS Selects Rental Returns for Audit
#150
Renting to Family Below Market Rate
#153
Avoid the Hobby Loss Rule
#184
Good Records Are the Best Audit Protection
#242
Digital Receipt Storage for Audit Defense
+6 more tips in this category
Estate Planning (14 tips)
#52
Step-Up in Basis Eliminates Capital Gains
#83
Holding Rentals in a Revocable Living Trust
#88
Gifting Rental Property Has Tax Consequences
#102
Irrevocable Trusts Remove Property from Estate
#106
Suspended Passive Losses Vanish at Death
#138
Charitable Remainder Trust to Defer Gains
#176
Family Limited Partnerships for Estate Planning
#206
Transfer on Death Deed to Avoid Probate
+6 more tips in this category
Insurance (12 tips)
#6
Insurance Premiums Are Deductible
#35
Umbrella Insurance Premiums Are Deductible
#61
Flood and Earthquake Insurance Are Deductible
#89
Casualty Losses from Natural Disasters
#105
Deduct Home Warranty Plans on Rentals
#132
Deduct Rent Loss Insurance Premiums
#199
Insurance Premium Deduction Timing
#212
Umbrella Insurance Policy Deduction
+4 more tips in this category
Closing Costs (12 tips)
#10
Closing Costs You Can Deduct Right Away
#62
Deduct Loan Points Over the Loan Term
#72
Title Insurance Gets Added to Your Basis
#107
Capitalize Interest During Construction
#136
Deduct Ongoing Notary and Recording Fees
#218
State Transfer Tax Deduction on Acquisitions
#231
Deducting Closing Costs on Refinance
#295
Deducting Title Insurance at Closing
+4 more tips in this category
Travel (10 tips)
#8
Track Mileage to Your Rental Properties
#27
Deduct Travel to Inspect Properties
#75
Use Actual Vehicle Expenses Instead of Mileage
#87
Meals While Managing Properties: 50% Deductible
#125
Deducting Out-of-State Property Visits
#158
Deduct Conferences and Networking Events
#189
Tracking Mileage for Property Management Drives
#240
Travel Expenses for Out-of-State Property Visits
+2 more tips in this category
Retirement Accounts (8 tips)
#22
Buy Real Estate in a Self-Directed IRA
#60
Solo 401(k) for Self-Employed Investors
#121
Self-Directed Roth IRA for Tax-Free Rental Income
#198
Self-Directed IRA for Rental Property
#244
Solo 401(k) for Self-Employed Landlords
#298
Roth Conversion Offset by Rental Losses
#322
SEP-IRA from Rental Management Income
#350
Backdoor Roth for High-Income RE Investors
Home Office (6 tips)
Self-Employment (5 tips)
Tax savings work best with the right financing
DSCR loan interest is deductible. See the lowest rate from hundreds of lenders.